GLEBOW REALTY ASSOCIATES v. XYZ (2024)

Order, Supreme Court, New York County (Mary V. Rosado, J.), entered on or about October 4, 2022, which granted defendants’ motion to dismiss the complaint against them, and denied plaintiff's cross-motion for an order directing defendants to deposit into escrow sums due for past rent and use and occupancy, unanimously affirmed, without costs.

In a previous commercial holdover proceeding commenced in Civil Court, and following a hearing on notice at which plaintiff landlord appeared and presented evidence, Civil Court found that defendant tenant had used the premises for residential purposes with the landlord's knowledge and acquiescence, and therefore dismissed the proceeding without prejudice to commence a proceeding in Housing Court (Glebow Realty Assoc. v. Dietrich, 69 Misc.3d 1203[A], 2020 N.Y. Slip Op. 51172[U], 2020 WL 5949913 [Civ. Ct., N.Y. County 2020]).  The Appellate Term has since unanimously affirmed Civil Court's order (Glebow Realty Assoc. v. Dietrich, 81 Misc.3d 138[A], 2023 N.Y. Slip Op. 51432[U], 2023 WL 8901854 [App. Term, 1st Dept. 2023]).  Rather than commencing a residential holdover proceeding in Housing Court, plaintiff instead commenced this action in Supreme Court, seeking a declaration that, among other things, the tenancy was commercial, unaffected by any residential use, that the commercial lease expired with no right to renew, and that the unit is therefore not rent regulated.

Supreme Court properly determined that the doctrine of collateral estoppel precludes relitigation of whether the subject unit was used for residential purposes with the landlord's knowledge and acquiescence (see generally Conason v. Megan Holding, LLC, 25 N.Y.3d 1, 17, 6 N.Y.S.3d 206, 29 N.E.3d 215 [2015]).  Although the Civil Court hearing concerned the proper forum, it was necessarily decided in that hearing that the unit was used for residential purposes (see Ginezra Assoc. LLC v. Ifantopoulos, 70 A.D.3d 427, 429, 895 N.Y.S.2d 355 [1st Dept. 2010]).  Civil Court's prior determination, which has not been reversed or annulled in a proper proceeding, is not open to attack by plaintiff in a collateral action (see Matter of Silvar v. Commissioner of Labor of the State of N.Y., 175 A.D.3d 95, 102, 109 N.Y.S.3d 1 [1st Dept. 2019]).  Therefore, Supreme Court properly dismissed plaintiff's cause of action for a declaratory judgment based solely upon allegations of commercial use (see U.B.O. Realty Corp. v. Mollica, 175 Misc.2d 897, 898, 673 N.Y.S.2d 507 [App. Term, 1st Dept. 1997], affd 257 A.D.2d 460, 683 N.Y.S.2d 532 [1st Dept. 1999];  Ten Be Or Not Ten Be, Inc. v. Dibbs, 1985 N.Y. Misc. LEXIS 3374, *2 [Civ Ct, N.Y. County, June 12, 1985, 85–077], affd 117 A.D.2d 1028, 499 N.Y.S.2d 567 [1st Dept. 1986]).

The residential use of this unit, with plaintiff's knowledge and acquiescence, implicates the protections of the Emergency Tenant Protection Act of 1974 (see U.B.O. Realty Corp. at 898, 673 N.Y.S.2d 507;  Ten Be Or Not Ten Be at *2;  see also Metzendorf v. 130 W. 57 Co., 132 A.D.2d 262, 265, 522 N.Y.S.2d 533 [1st Dept. 1987]).  Supreme Court properly determined that the undisputed facts of this case, and the documentary evidence presented by the tenant, together establish that the unit qualifies for rent stabilization (see Rent Stabilization Law [Administrative Code of City of NY] § 26–504[a];  see generally Matter of Salvati v. Eimicke, 72 N.Y.2d 784, 791, 537 N.Y.S.2d 16, 533 N.E.2d 1045 [1988]).  Aside from continuing to argue that the unit is not subject to rent stabilization because the tenancy was commercial, a position which has already been rejected, plaintiff has identified no exceptions to rent regulation which might apply and does not claim that the unit was previously deregulated.

Supreme Court also properly denied plaintiff's cross-motion seeking rent and use and occupancy, as its lack of a proper certificate of occupancy precludes collection of rent or use and occupancy (see Multiple Dwelling Law §§ 301, 302;  Barrett Japaning, Inc. v. Bialobroda, 190 A.D.3d 544, 545, 140 N.Y.S.3d 498 [1st Dept. 2021]).

We have considered plaintiff's remaining arguments and find them unavailing.